May 17, 2021
Sterling Investments Limited (SIL) for the three months ended March 31, 2021, reported a 63% increase in total revenue to $80.43 million compared to $49.33 million recorded for the corresponding period in 2020. Management noted, “This was driven by larger F/X gains, an increase in interest income and an increase in the gains on sale of debt securities.” Of total revenue:
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- Interest income closed the period at $35.13 million, up 27% from the $27.70 million for the comparable period in 2020. Management noted, “SIL purchased additional securities to increase the income available to its shareholders. Investors will continue to benefit from the US dollar income SIL’s portfolio generates through dividend payments.”
- Gain on disposal of available for sale securities for the period increased to $16.89 million, an 81% increase relative to the $9.32 million recorded the prior year.
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- Foreign exchange gains amounted to $28.41 million, relative to a gain of $12.31 million booked the prior year’s period. SIL indicated that, “The Jamaican dollar depreciated by 2.8% in the first quarter of 2021 moving from J$142.10 per US$1 as at December 31, 2020 to J$146.58 as at March 31, 2021.”
The company experienced a 45% decrease in total expenses for the period to total $24.70 million (2020: $44.67 million) for the quarter ended March 31, 2020. This was as a result of the following;
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- Interest expense totaled $3.03 million (2020: $2.81 million).
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- Other operating expenses totaled $12.58 million (2020: $8.15 million), up 54% year over year, due to “increased management fees,” as per SIL.
- SIL booked an impairment loss on financial instruments of $8.47 million relative to the loss of $860,877 for the corresponding quarter in 2020.
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- The Company booked ‘Unrealised fair value (loss) on equities and structured notes at FVTPL’ of $621,218 compared to a loss of $32.85 million for the first three months of 2020. Management noted, “The profit for the three months ending March 31, 2020 included a J$32.847 million unrealized loss on structured notes and equity investments at fair value through profit and loss. This was the result of a dramatic decline in market prices in the early response to the COVID19 pandemic. For the first quarter of 2021, the unrealized loss on structured notes and equity investment securities at fair value through the profit and loss was J$621,218. The improved market prices led to a substantially smaller unrealized loss and thus contributed to a much higher profit for the period. “
Operating profit recorded for the period closed at $55.73 million relative to a profit of $4.66 million booked for the prior year.
Other income for the quarter decreased from $212,690 reported in 2020 to $19,250 for the period under review.
Pretax profit amounted to $55.75 million (2020: $4.87 million).
Tax charges of $519,831 (2020: $286,646) were booked for the first three months and as such, net profit amounted to $55.23 million, relative to 2020’s first quarter net profit of $4.59 million.
Total comprehensive income for the quarter amounted to $45.68 million compared to an loss of $261.57 million booked for the similar quarter of 2020.
Earnings per share for the period amounted to $0.13 relative to EPS of $0.01 in 2020. The trailing twelve months earnings per share amounted to $0.45. The total number of shares used in the calculations amounted to 414,526,305 units. Additionally, SIL’s and SILUS stock price closed at J$3.09 and US$0.02 as at the end of trading on May 17, 2021.
Balance Sheet Highlights:
As at March 31, 2021, the company’s assets totaled $2.03 billion, 44% more than $1.41 billion a year ago. This resulted mainly from an increase in ‘Investment Securities’ which closed at $2 billion, 47% more than the $1.36 billion booked as at March 31, 2020. SIL noted, “This was partially attributed to the rise in value of the existing portfolio and also the acquisition of new assets that have subsequently appreciated in price.”
Shareholder’s equity as at March 31, 2021, stood at $1.46 billion compared to $956.58 million in 2020. The book value per share as at March 31, 2021 amounted to $3.52 (2020: $2.31).
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